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Fixed mortgage rates drop to record lows

Average U.S. rates on 30- and 15-year fixed mortgages dropped to record lows again this week, with the 15-year loan dipping below 3 percent for the first time ever.

Low rates have helped brighten the outlook for home sales this year. They have made homebuying and refinancing more attractive to those who can qualify.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan fell to 3.75 percent. That's down from 3.78 percent last week and the lowest since long-term mortgages began in the 1950s.

The rate on the 15-year mortgage, a popular refinancing option, slipped to 2.97 percent. That's down from 3.04 percent last week.

Rates on the 30-year loan have been below 4 percent since early December. The low rates are a key reason the housing industry is showing modest signs of a recovery this year.

A drop in rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.

In April, sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence in the market, breaking ground on more homes and requesting more permits to build single-family homes later this year.

A better job market also has made more people open to buying a home. Employers have added 1 million jobs in the last five months.

Still, the pace of home sales remains well below healthy levels. Economists say that it could be years before the market is fully healed.

Many people are having difficulty qualifying for home loans or can't afford larger down payments required by banks. Some would-be homebuyers are holding off because they fear that home prices could keep falling.